tv Studio 1.0 Bloomberg November 1, 2015 7:30am-8:01am EST
♪ emily: he is tech's biggest outlaw, under house arrest after a massive raid by new zealand commandos. kim dotcom is known for his outrageous personality as he has trotted the globe from germany, to hong kong, to new zealand. now he is the target of the biggest copyright case in history, accused of trafficking in pirated music, movies, and tv shows, as he awaits an extradition hearing to decide his fate. joining me today on this special edition of "studio 1.0" from auckland, new zealand, megaupload founder and self-proclaimed ruler of the
kimpire, kim dotcom. kim, thanks for joining us. kim: hello. emily: it has been a year since you have spoken publically. you have been under house arrest. what are the rules now? where can and can't you go? kim: well, i am not allowed to leave the country. i have to report to the police twice a week that i am still here. emily: you had your freedom until the day of that raid, right? kim: yes. emily: take me back to the day of the raid. kim: 72 cops, heavily armed with assault rifles, storming the property. some of them arriving in helicopters, some of them arriving with attack dogs. completely bizarre scene. my staff had to lie with their face on the ground, guns pointed at them. my little kids crying because they were scared. my wife separated from the children. and, when they got to me, they beat me up. the rest is history. emily: there is a description of you standing there with a
sawed-off shotgun. kim: you know, the police officer that made that story up in the press conference, he had to admit later in court that he made it up. i was sitting there, calm, with my hands in the air. emily: unarmed? kim: completely unarmed. emily: what did they take? kim: thousands of servers, offline, that hosted the data of millions of users that have used our web services. emily: most of your assets are still frozen. kim: they are now saying everything they have seized here now belongs to the u.s. government. emily: i know you have said you are broke. would you call yourself broke now? kim: we recently had a judgment from the court releasing $4.6 million for legal fees and living expenses. so at the moment, if that judgment is not appealed, financially, i am in a better position now than i was a couple of weeks ago. emily: have you thought about moving to a cheaper place? kim: yeah, but that would also
mean -- it is kind of my last stand, fighting for my castle, for my home. you know, i am also trying to send a message to them and show them i am not going to fold over. that i am going to fight back. emily: right now you are wanted by the u.s. government in the biggest copyright case in history. the charges include racketeering, money laundering, wire fraud, copyright infringement. you face decades in prison. just how much time in prison are you facing? kim: 88 years. emily: 88 years. they say you owe $175 million. is that correct? kim: they say that the profit that megaupload made and all of that should belong to hollywood. emily: yet, in this particular case, you have yet to be found guilty of anything. kim: mm. emily: what is the myth of kim dotcom, and what is the reality? kim: i am absolutely not legendary. you know.
i am who i am. i live my life the way i like. i do not limit myself or my thinking. usually, when i have an idea and i have a plan, then i see it through. you know. emily: you were born kim schmitz in west germany. kim: that is right. emily: what kind of kid were you? kim: i was a naughty kid. my mother, i am so sorry. [laughter] i'm really sorry. i was a bad kid. once i had my first computer, everything changed for me. i just started questioning everything. why go to school? this is the future. this is what i want to do. emily: how did you become a hacker? kim: when i was in my teens and i had my first modem, i was so excited to be able to chat with people halfway around the globe that shared the same interests, hacking. it was so exciting to go into computer systems and find out things that you are not supposed to see.
it's a bit of an adventure. emily: you said you hacked the pentagon, citibank, nasa. that you obtained top secret documents on saddam hussein, tracked down osama bin laden's bank accounts. kim: back in the day, after 9/11, which really affected me, i felt deeply unhappy about that. i was trying to do something, to be part of the effort to stop people from ever doing that again. emily: you did all those things? all that is true? kim: some i did not do myself. there were other things i did. emily: some people would say there is no proof. kim: well, there is no proof. [laughter] emily: when and why did you change your name to kim dotcom? kim: i bought the domain, kim.com. i thought it would be great if my name was kim dotcom, so if anyone wants to know anything about me, i do not have to hand them a business card or anything. they can just go to my website. it is all there. emily: take me back to the start of megaupload.
kim: i was a street racer. and i always made great videos about that and shared that in the street racing community, on the forums. the file sizes kept getting bigger and bigger, and you could not send large files over email, so i wanted to solve that problem by creating a server where you can upload a file, get a unique link, and then e-mail the link to the people you know. it was just a convenient solution to a problem that is still relevant today. emily: how quickly did it grow? kim: instantly. it was massive. within weeks, we had to buy additional hardware, additional servers. no single penny was spent on advertising. the thing just got its own life. emily: at its peak, 50 million daily users? kim: yes. emily: billions of files. 48,000 file transfers a minute. is that about right? kim: yeah. emily: 4% of internet traffic. kim: that's right. emily: in its prime, how much of megaupload's content was legitimate and how much of it was pirated? kim: the vast majority of files on megaupload are completely legitimate.
there is no difference between megaupload and services like dropbox or the new mega today. you can use it for good things and you can use it for bad things. you can buy a knife and stab someone in the heart, or you can use it to slice your bread. you know, you're not throwing the knife maker into jail because someone is murdering someone with a knife. emily: copyright holders say you robbed them of hundreds of millions of dollars. kim: well, how can i have done that if i, myself, have never uploaded a single copyright file onto megaupload and shared it?
emily: but did you try hard enough to stop it? kim: we followed the law. when we got copyright notices, we took them down. but in addition to that, we gave over 150 copyright holders direct access to our servers to delete links they did not like, that were infringing on their copyright. emily: you also -- you had a rewards program. so you paid users to upload content. they made more money the more popular their content was. what is popular? movies that have not been released, music that is free. in that case, weren't you complicit? kim: i do not think so. because if you look at our rewards rules, which were right there at the front page, it says you cannot upload stuff that does not belong to you. we limited the rewards program to files smaller than 100 megabytes. the moment you upload some sort of rip of a movie, you do not make a penny. emily: do you believe in copyright, first of all? kim: i believe in copyright, but i do not believe in copyright extremism. extremism is if you are a hollywood studio, and you release your content in one country first, in the united states, and then roll it out over a couple of months in other countries around the world and expect the internet community in all of these different countries to wait for the release. they have just launched netflix here in new zealand. the catalog of content that you can download is roughly 10% of what they offer in the united states. that is completely unfair. and because people do not get that access, they are looking for the stuff elsewhere.
so it is a problem created by the content creators. i am not responsible for that. if they would have an offering that has all content globally available for a fair price on any device, piracy would shrink into insignificance. but they are not doing it. emily: but if it is illegal and you are not trying hard enough to take it down or you do not take it down, doesn't that mean what you are doing is illegal too? kim: no. i have tried everything. we were just a small company based in hong kong. we didn't catch up yet with the latest technologies, and we were not even given an opportunity to do that. emily: do you think the artist who makes the song, tv show, the movie, the videogame creator -- do those people deserve to be
paid? kim: absolutely. yes. emily: so if those people deserve to be paid, yet people are accessing that content illegally, how do you find a balance? kim: where is the problem? i do not see artists starving. emily: so just because they are making money, does that make it is fair that others should be able to access their content illegally? kim: no, i do not think that is what i am trying to say. i just think everyone should look at it a bit more realistically. all of these these hollywood moguls are living in mansions that are bigger than mine. it is the greed that is dominating this debate. it is not like anyone is starving, right? the movie industry makes more
money year after year. society that wants to have access to this content, but hollywood does not make it available. i am just a tiny piece in the middle of that. i am not responsible for that. emily: you think the government is trying to make an example out of you? kim: absolutely. yes. emily: president obama, in saying that piracy is a matter of national security, is saying the innovation and creativity and stuff the american people create is our biggest asset. so, why should we allow it to be stolen? kim: that argument does not include the question, why don't we make this great product available to everyone in an easy format? actually, if hollywood had some smart people working for them, they would probably have the biggest internet company on the planet. emily: so explain to me how this great internet company out of hollywood would work.
kim: well, it is quite simple. if you have a content platform that is, say, owned by all these different studios combined, and they would make their product available, their entire catalog, everything, at a fixed monthly fee for everyone to access around the world, they would have the biggest internet success in history. i can understand the dilemma, but to make me responsible for that is really outrageous. emily: what is your message for president obama? kim: what is my message? well, it would have been nice if he delivered the change. it would have been nice if he did not spy on the world population. i'm disappointed in his
♪ emily: you were arrested for the first time when you were 18. kim: yeah. emily: you were convicted of insider trading later. kim: yeah. emily: why should we trust you now? many people think you are the world's biggest pirate. a white-collar criminal. kim: i am an easy target. when i was a young man, i made some mistakes. i was a hacker. i never hurt anybody. i hacked into systems, because i was an adventurer. i wanted to find out if aliens really exist. but i have grown. i am a family man. i have five kids. i am different. i am not a criminal. emily: tell me about mega. what is this new business that you are working on? kim: after the raid, i spent a lot of time thinking about the intrusion of privacy. because in my own case, they
have used the nsa to spy on me. the prime minister of new zealand has apologized for that, because they have done that illegally. i created a cloud storage website where people who upload their files can be 100% sure their data is fully encrypted, that no government can access it. that we, as a service provider, cannot access their private data. emily: so even you cannot see what is in the files? kim: that is correct. emily: so the nsa could not get in. kim: no. they would get a lot of garbage. emily: what is to stop this from becoming a bank for criminals? kim: it is your right to privacy. i think that right overrules anything else. emily: is there anything you would have done differently? kim: absolutely. emily: like what? kim: if anyone from the u.s. government had reached out to us and said, well, we have a problem here. we never got any warning like that. emily: tell me about your relationship with edward snowden. kim: i think he is a hero. i admire him for his courage. he will be remembered in history as one of the great people of our time. emily: what is he up to now? kim: he is happy, he is fine. he is in russia. i think he is pleased that the debate has been triggered, based on the good things he has done. especially to americans.
emily: when it comes to china, iran, islamic terrorists, the united states government, what are you most worried about when it comes to spying, hacking? kim: i am worried about the situation in ukraine. i think putin is someone i would be very careful with. i think that obama has done a good thing in negotiating with iran and trying to find a resolution to this nuclear standoff. emily: what about some of the other countries? like north korea and sony? should we be concerned about north korea? kim: well, you do not really believe that north korea hacked sony. i do not believe that for a minute. emily: who did, then? kim: well, some sophisticated group that has an interest in what hollywood is doing around the world. emily: you do not think it is a group that has ties to north korea? kim: i do not think so. i do not think north korea has the capabilities. it is just such a beautiful
story for the u.s. government to put this onto north korea. it is more likely that it was some insider at sony that was disgruntled. emily: i know you are particularly worried about microsoft. kim: obviously, windows software is the most interesting target for the u.s. government, because everyone is using it. if you can just use windows update to install a backdoor on some target, you know, then that is the most convenient way to get access to everything that happens on an individual's computer or on government computers or bank computers. and it is just the logical extension of what they have already done. emily: you are saying julian assange is going to be hillary's worst nightmare? kim: i think so. ♪
♪ emily: what about julian assange? what is your relationship with him? kim: what julian assange is doing is putting a spotlight on all these secrets. emily: how often do you talk to him? kim: [laughs] why is that important to you? emily: i am curious. kim: look, i like these guys. i look up to them. i think they are very brave. they are going through a hard time. they chose to do that for the betterment of all of us. so, yeah, i love to talk to them. emily: so, you said you would bring the internet party to the u.s. in 2016. why? what is your goal? kim: because i think there is a big group of people out there that disagree with what is going on, you know? they want to have their privacy back.
they want to have internet freedom. emily: you tweeted that you were going to be hillary's worst nightmare in 2016. how so? kim: well, i have to say it is probably more julian. [laughs] but i am aware of some of the things that are going to be roadblocks for her. so, if i can provide some transparency with these people and make them part of what the internet party stands for, then i will be happy to do that. emily: you are saying julian assange is going to be hillary's worst nightmare in 2016. kim: i think so. emily: how so? kim: well, he has access to information. emily: what information? kim: i do not know the specifics. emily: why hillary in particular? kim: well, hillary hates julian. she is just an adversary of, i think, internet freedom. emily: she signed your extradition request. kim: yes. emily: so you have a bone to pick with her.
kim: you know the crazy thing is -- i actually like hillary. i like obama. it is so crazy that all of this happened. emily: so the internet party has not worked out in new zealand. as i understand it, it was kind of a flop. how do you resurrect that? kim: a lot of times, when i created something new, it was a bit ahead of its time. i think a political party is something that grows over time. emily: if you are not extradited, what is next for you? kim: i think this case is going to go on for a very long time. i have prepared myself for that, mentally. this will be a fight for a very long time. emily: what do you want your legacy to be? kim: i am working on something new that i am really excited about. it is called meganet. it is an alternative internet. i want to create a new internet that gives people the power over the network rather than governments and corporations. emily: the people have the power rather than the company. kim: the way meganet works, it turns every mobile device into a router-server and allows devices
to communicate with each other to create a network that still utilizes the internet as a pipe, but fully encrypted. it is an internet that is completely run by the people, for the people, with all the idle capacity on your mobile devices carrying the network. emily: how do you want to be remembered? kim: at the end, i want my children to look back at whatever there is to learn about me and be proud of me. emily: do you think they will be? kim: yes. emily: kim dotcom, thank you so much for joining us. it has been a fascinating conversation indeed. kim: thank you. emily: thank you. ♪
>> coming up, the central banks act and the markets react, from washington to brussels to beijing, it has been an intense week of focus on monetary policy. earning season is here. some companies missed targets. get the stories beyond the numbers. controversy rocks valley and pharmaceuticals. a new casino opens in macau. plus the most compelling digital video and telling charts from around the world in the last five days. this is "bloomberg best." ♪